Tax treatment of business equity (buyback)

1,092 Views | 7 Replies | Last: 1 mo ago by SquareOne07
SquareOne07
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11:17a, 4/30/26
AG
Ultimately a tax guy question which is who he's pinging, but like yalls read on things too:

- guy B bought 10% of guy A's business 1+ year ago (financed)
- guys split
- guy A paid guy B a negotiated amount of $180k

How is the $180k taxed?
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I bleed maroon
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In reply to SquareOne07 • 11:27a, 4/30/26
AG
SquareOne07 said:
Ultimately a tax guy question which is who he's pinging, but like yalls read on things too:

- guy B bought 10% of guy A's business 1+ year ago (financed)
- guys split
- guy A paid guy B a negotiated amount of $180k

How is the $180k taxed?

Not a tax guy or a CPA, but my input => Capital gains tax on anything over his adjusted basis.
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one safe place
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1:32p, 4/30/26
What type of entity?
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SquareOne07
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In reply to one safe place • 2:02p, 4/30/26
AG
one safe place said:
What type of entity?


Law practice
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one safe place
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In reply to SquareOne07 • 9:48p, 4/30/26
SquareOne07 said:
one safe place said:
What type of entity?


Law practice

Sorry, I meant is it an LLC taxed as a partnership, an S corporation, a C corporation or what?
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SquareOne07
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10:57a, 5/1/26
AG
LLC as S Corp. client was W2
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9:37a, 5/2/26
Got you. Basis then is a moving number but you likely already know that. It can also be important the type of entity since in some situations relief of liabilities is treated as an amount realized and thus more gain on the transaction.
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SquareOne07
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In reply to one safe place • 9:45a, 5/2/26
AG
Perhaps relevant to the top is a steep (75%) discount in payout value.
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